Economic Edge

World View & Market Commentary. Forest first; Trees second. Focused on Real & Knowable facts that filter through the "experts" fluff and media hyperbole. Where we've been, what the future may hold and developing a better way forward.

Wednesday, February 14, 2018

For those who aren’t yet aware, there is a Litecoin fork (first ever) that’s supposed to occur on the 18th or 19th of this month, just a few days away.

Supposedly you can receive 10 Litecoin Cash (LCC) for each LTC you possess at the time of the fork. This has caused much speculation and has people scrambling to buy LTC prior to the fork.

On the LTC chart, you can see that it just had a major breakout higher and has shot back above $200/coin:

As you can see on that chart, the downtrend has clearly been broken to the upside, it is a very bullish chart.

Note how similarly to BTC, LTC touched the 200 day moving average and has bounced producing a new buy signal on the daily MACD.

But is LCC a scam or is it legit?

According to Litecoin Founder, Charlie Lee, it is a SCAM. Here are his recent tweets on the subject:

PSA: The Litecoin team and I are not forking Litecoin. Any forks that you hear about is a scam trying to confuse you to think it's related to Litecoin. Don't fall for it and definitely don't enter your private keys or seed into their website or client. Be careful out there! https://t.co/qXbiIxp5Al

Since on the topic of scams, any fork of Litecoin, calling itself Litecoin something or other, is a scam IMO. Litecoin Cash, Litecoin Plus, Litecoin *... all scams trying to confuse users into thinking they are Litecoin.

Clearly, Charlie believes it to be a scam. In fact, he like many others, believe people doing these forks and using the Litecoin or Bitcoin names are inherently weak for trying to piggyback on the name and not doing their own coding and marketing. I agree with this philosophically.

Most forks piggyback not only on the name, but they use the open source Bitcoin code – in fact that’s exactly what Charlie Lee did, he copied the BTC code, made a few changes, changed the name, and has made millions off it. Okay, that’s the way open source is, and the BTC source code is far and away the most proven and secure.

Now, when I go to the LCC official website, I find that they list many benefits, including the fact that old BTC mining software will be able to mine LCC.

Their website is respectful and seems to be looking after people’s interest with their “safe fork” discussion. However, there is no whitepaper and the team is very young and thin with only 4 members.

From the LLC website, here is an LCC comparison table:

Note that Charlie Lee says not to give them your LTC keys in order to claim your LCASH. I would agree, at least at a minimum I would wait to see if in fact people are successfully claiming them, and that an LCASH wallet actually materializes.

Regarding this, the LCC team seems to agree by stating a truism, “Firstly, NEVER paste private keys that hold any currency into ANY website or wallet in order to claim forked coins (including ours). Practice responsible forking: 1. Wait for the fork; 2. Move your Litecoin to a new address; 3. Use the private key for the "old" address to claim your Litecoin Cash.”

One thing is for certain, with Charlie Lee at Coinbase, don’t expect Coinbase to distribute LCC to your account automatically! Thus if you wish to claim your LCC, you must ensure that you have your LTC in your possession, inside your own LTC wallet off any exchange (I use Trezor). Then move the LTC to another wallet or an exchange, then use the old and now empty wallet keys to claim your LCC.

So, I do think there is a high probability that this is a scam, at a minimum it is a fast and loose copy/modification of the LTC/BTC source code. That said, I do have my LTC off exchange and will be able to claim my LCC once proven. I will wait and watch before attempting to claim my LCC tokens. If I am successful, I will immediately sell them since there is no whitepaper, and since the “team” looks to be profiting with minimal effort on their part. Then I’ll use the proceeds of that sale to purchase LTC.

Tuesday, February 13, 2018

Boy am I a fan! My
hope is that this year Segregated Witness and the Lightning Network will
radically change the speed and cost of transacting with Bitcoin.

But wait, there’s more… Lightning also can accommodate cross-block
transactions. This is HUGE, a game
changer, because it means that we’ll be able to trade one another different
coins directly with NO MIDDLEMEN. This,
and other technologies like Atomic trading and Plasma, mean that days are
numbered for exchanges (except to get dollars if required, they are certainly
not desired).

Not only that, but as Andreas Antonopoulos points out in the
video below, the Onion Routing will ensure true PRIVACY. This is also a game changer – it means that
we can truly claim our personal monetary and fiscal sovereignty by righting a
huge wrong that has been held over humanity’s heads by central bankers. Namely that they can see everything you do,
but you can see nothing they do. This
turns that inside out, in a proper rule of law manner. Banking secrecy by private individuals illegally
given the right to produce unlimited quantities of money is ENDING, and I say “YAY!”

This fact alone will bring BILLIONS of people
worldwide into this new system of “banking.”

Right now lighting is running in a test mode with test
nodes. A node is simply the entire
ledger that resides on your computer so that as transactions occur the ledger
that exists on your computer can be compared and verified by other ledgers on
other computers to verify transactions. The
more nodes, the more robust, and the more decentralized the network is.

Once verified, hopefully later this year, Lightning will
release a final version of their node software that likely will include
incentives for people running a full Lightning node. I currently run a full Bitcoin node on my
computer and will also run a Lightning node when it is released. I’ll write more about running your own node
later, it’s certainly easy to do and actually doesn’t require any expertise and
very little energy and bandwidth – I don’t even notice my computer is running
it.

The following video describes roughly how the Lightning Network works:

This video is an interview with Lightning CEO Elizabeth Stark:

And this video is with Andreas Antonopoulos who answers questions about the lightning network:

Monday, February 12, 2018

This is another very interesting interview with Trace
Mayer. Well worth the time, he covers
the Lightning Network on top of Bitcoin and how it will speed transactions and
lower costs. He also covers the
possibility of Atomic trading, but most importantly discusses how to claim your
personal sovereignty now that the monopoly on money has been broken!

I have returned from two weeks of very fun off-road
motorcycle riding in Southern Utah.
That’s the good news.

The bad news is that I had a 30+ mph encounter with a
boulder and the boulder won – launching me into a head/back landing that
resulted in 3 fractured ribs and 3 compression fractures in my vertebrae!

Painful for sure, but thankfully I will heal - hopefully
with little or no lasting damage. Soft
tissues are already better, but bones take longer to heal. In the meantime, my
energy level is returning already, but not quite what it was, so expect a slow
ramp back up into things.

Bitcoin Breakout:

Bitcoin (also as a proxy for the rest of the Crypto market)
is breaking out from a descending wedge pattern as seen clearly on the Daily
chart below:

A descending wedge is a coil, the breakout higher should be
strong – I would like to see buying pick up over the next several days to
confirm the breakout. Note that two days
ago price broke the downtrend line, but that line was retested and now prices
have bullishly reversed yesterday’s downside move.

There are two
historic buy signals on this chart!

First note that the volume on the day prices bottomed at
$6,000 was heavier than the surrounding volume – that is a positive.

More importantly, since 2015 there have only been two prior
instances of BTC price actually touching or going below the 200 day moving
average (dma). You can see that prices fell
below that average for a few days. The
200 dma is a very important long term indicator for Bitcoin because it’s hard
to tell how far ahead of itself prices are at any point in time. But at the $20,000 peak price, BTC was almost
4X the 200 dma! That was a historic over
valuation at that level.

EVERY TIME (as in 100% of the time) that prices have been
below the 200 dma, it has been a perfect entry point to buy Bitcoin! Thus, NOW (or any level below or close to the
200 dma) is the right time to be buying via that indicator alone.

Now note on that chart the MACD. Those low MACD figures represent a historic
BTC low. And if you look at the red
circle you will see that from those historic low levels the ‘fast’ has crossed
over the ‘slow’ thus indicating a BUY SIGNAL on the Daily MACD. Note that the weekly MACD is still on a sell,
but that the monthly MACD never went to a sell, and is still on buy signal.

The chart below is a WEEKLY BTC chart. It shows a strong bottom-like Doji
candlestick, often seen at bottoms. The
price moving out of the wedge and up from the cross is bullish:

Now please take a good look at the following chart. I have replaced the MACD indicator at the
bottom with RSI (Relative Strength Indicator).
There have been seven instances since the beginning of 2015 where the
RSI has touched or dipped below the 30 level.
Just look at the last two times!
Had you bought on each low, the return from July of last year to the
next high was 178%, but the return from the September low was a staggering 621%!

So, should you buy when the RSI dips below 30? YOU BET!
That just happened, again, a good place to buy. Note that the data for BTC doesn’t go back in
time far enough to have useful data on the weekly and monthly chart for RSI.

All these indicators tell me that this chart is bullish,
that it is time to get money back to work in the BTC market, keeping in mind
that the rest of the Crypto space follows Bitcoin. I expect to see the overall BTC Market Cap
skyrocket from here:

Market Cap Total

Note that total Crypto market cap was cut in half, bottoming
just below $400B. Today it is at $426B,
I expect that we will cross the Trillion Market Cap line prior to the end of
July.

Tuesday, January 23, 2018

Can't say enough about how spot on Trace Mayer is in this most excellent video.

Not only is the well spoken Trace Mayer right about bitcoin’s value proposition, but he thoroughly understands money, the history thereof, and the criminality that is the current central banking system.

Note the immutability of Bitcoin compared to other Cryptos… Video is well worth the time.

Monday, January 22, 2018

*Note: I will be traveling for the next two weeks and will
be unable to make posts on a regular basis until I return.

Downward pressure on the entire space obviously
continues. There has been a series of
H&S patterns as well as bearish flags that have all worked to take prices
lower. There is one pattern that is
still targeting the $8,400 range, that target has not been reached and is still
valid. Here’s the Big Picture Daily chart:

Here’s a 30 minute chart, I can’t remember seeing a chart
that had so many well developed H&S patterns in such close proximity:

There is a definite psychology to Head & Shoulder
patterns, these are classic patterns and actually do not look contrived or
manipulated to me. If you want to see
contrived, just look at a chart of the DJIA, S&P500, or NASDAQ. There you will find manipulation, historic
overvaluation, and a classic bubble.

So the question then is: Are the banks manipulating the
price of Bitcoin (and by extension other coins as well)?

There certainly are a lot who think so – and it doesn’t help
that the top was put in the day Bitcoin futures began trading! The fear of Bitcoin manipulation looks like
this:

At about $5,000 BTC the banks start buying actual BTC like crazy
rapidly running the price up. Jamie
Dimon, CEO of JPM, calls BTC a “fraud” in order to intentionally drive the
price down. Meanwhile JPM and other
banks are buying with both fists (they can simply materialize Dollars after
all). They buy hard running up to the
opening day of the futures market.

On opening day they short BTC like crazy via the new futures market and begin selling
their actual Bitcoins, thus driving the price back down in order to profit on
their futures bets… Once they run out of
BTC to sell, they will flip that trade, begin buying, rinse, repeat, rinse,
repeat.

That’s the thinking, but is that reality?

First of all, there is no doubt that it should be understood
that banks and bankers are NOT your friend.
Nor are they the friend of humanity – period. So none of that is beneath them, for sure.

This seems “foggy” to most people, so let’s examine the
mechanics involved in both Futures and ETFs:

FUTURES

Futures are EXACTLY like gambling – they are, in fact,
legalized gambling. They are a bet on
the future price of an underlying asset – be it gold, silver, oil, Bitcoin, or
whatever.

The CME Group is the exchange that handles trades of Bitcoin
futures. An important aspect of their
futures contracts is that all settlements are in CASH, NOT BITCOIN. This means that they do NOT need to own any
Bitcoin in order to settle payment.

There are rumors going around that the banks have made deals
with the exchanges in order to use Bitcoin held by the exchanges as backing for
those futures contracts. This is not
necessary since the banks can and do settle all BTC futures contracts in Dollars
– remember, banks can simply turn on their printer to make more Dollars, they
don’t have to own BTC. They are running
a betting parlor, a gambling side show that has ZERO function on behalf of a
proper society.

This is not to say that there aren't legitimate uses for some
futures, there are – like airlines and other businesses who use them to hedge the price of
oil. But a need to hedge the price of
BTC? Not yet (but big players who accept BTC as payment may want to hedge
in the future).

So if the regulators think its okay to trade BTC futures,
why would they turn down every application to date to create an ETF?

Oh yes, we’ve heard their excuses – you know, they are
trying to “protect us.” LOL

ETFs

No, they don’t give a rats behind about you or me losing our
money! They steal it every chance they
get, it’s a laughable proposition that some banker or regulator is “protecting”
the public.

There are two types of Exchange Traded Funds (ETFs). One type is just a piece of paper where the
scammers who organize it claim to follow the price of the underlying asset –
gold, silver, real estate, bonds, whatever.
They take exorbitant fees all along the way, and thus these paper tigers
rarely, if ever, maintain the value anywhere near equal to the actual
underlying. Why would you own them over
the underlying? Only for short term
trades so that you don’t have the hassle of taking possession – that’s it. Oh, and you can leverage these (the slippage
is even more pronounced over non-levered ETFs).

The other type of ETF is one whose charter documents require
the company to actually own the underlying asset in an amount (close to) equal
with the amount of funds deposited into the ETF. This is like GLD and SLV – they are required
to actually buy physical gold or silver.

And this is EXACTLY what the banks and regulators DO NOT
WANT! Why?

Because, unlike any other asset on the planet, and
especially unlike any financial asset on the planet, Bitcoin is strictly
limited in quantity! That means that if
money goes into an ETF that is required to buy it, then the price will rise, it
will draw more interest, and that interest will weaken their power and
control. That’s the real reason.

This is a very important point – When you invest in any
paper financial asset, you are buying something from them… and then they simply
make another, and another, and then 10 trillion more!

But Bitcoin, nuh, uh!
No sir. You buy a bitcoin and
there is no making a new one – no replacing it, no forging it, no hacking
it. The decentralized trusted ledger
makes this possible – and it is a revolution for humanity. So imagine a BTC ETF that requires the fund
to own actual BTC… There are only 16 million BTC, what do you think pumping
millions and billions more into BTC via ETFs will do?

I highly doubt they will allow it anytime soon – maybe a
pure paper ETF, that would take money that otherwise may have found its way
into the actual underlying. And that is why paper dollar settled futures
and ETFs only - they are a-okay in diluting Bitcoin as it brings them wealth,
power, and control. But they will strictly attack anything that promotes
the underlying BTC - watch for this, it will become clear.

What they really care about is that they know Bitcoin and
the coins that aren’t issued or controlled by them erode their power base. They are losing control, and they know
it. It’s very small right now, and they
intend to keep it that way if they can.

I can assure you and them that they have lost already – it’s
only a matter of time.

PLEASE – For the sake of humanity – do not put a single
dollar into any paper BTC product!!
Those who do are as complicit as those who make them – karma will take care
of them in the end.

REAL PEOPLE OWN REAL BITCOIN – and they take the actual coin
off the exchange and put it in their own electronic wallet – that way the
exchanges cannot “FRACTIONALIZE” BTC which I can tell you they all do.